Young drivers underestimate cost of car insurance

12.00 | 11 November 2015 | | 1 comment

More than half of young drivers underestimate the cost of insurance in their first year of driving, a new RAC survey reveals.

56% of the 500 young drivers surveyed by the RAC expected their first premium to be under £750 when the average insurance cost for 25-year-olds and under is in fact £810 a year.

Average policy costs show 18-20-year-old drivers pay the most at £972 a year, compared to the average UK private car driver premium of £367.

Insurance is seen as the greatest barrier to owning and running a car, with 62% of those questioned saying this was the case, as opposed to 22% who felt it was the cost of the vehicle itself, and 12% who cited day-to-day running costs.

The RAC research showed 17% of young motorists budget £750 to £999 for annual insurance, in line with the £810 UK average cost of a young driver policy. 15% opted for £1,000 to £1,500, one in 10 (9%) £1,500 to £2,000 and just 5% planned on their insurance costing them more than £2,000.

In terms of arranging insurance in the first year of driving, half (51%) of those questioned said they had help from their parents. Four in 10 (43%) paid their premium in one go with a similar percentage (44%) opting for monthly payments.

The survey was published to coincide with the launch of RAC Black Box Car Insurance which operates via a matchbox-sized telematics device which tracks speed, braking and acceleration – along with where and when the policyholder drives – in order to calculate how safe they are through a ‘Driver Score’. However, there are no curfew or mileage limits so the policyholder is free to drive when, where and how far they like. 

Mark Godfrey, RAC insurance director, said: “The cost of car insurance for young and new drivers is unquestionably high due to the high cost of claims, and unfortunately we expect it to increase over the next few years which will make it even harder for young drivers to get motoring.

“But it doesn’t have to be that way with a ‘black box’ policy which allows new drivers to prove how safe they are. The beauty of telematics is that it is fairer for young drivers as, rather than simply rating them in line with every other young driver, they can be judged on their own driving ability and potentially earn cheaper insurance premiums and renewals as a result."


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    I can quite understand that young drivers are not prepared for the actual cost of their first insurance. That said I remember some few years ago a first time car driver would have purchased a car for a couple of hundred quid and then been horrified to find that the insurance was in the £3,000 to £7,000 mark. Those figures have certainly come down.

    I am in favour of black boxes and reducing premiums accordingly. That said it only takes someone else to be at fault and the black box may not be able to discriminate as to blameworthiness in some circumstances.

    Bob Craven lancs..Space is Safe Campaigner
    Agree (0) | Disagree (0)

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